Homework Help: personal finance

Posted by shanty on Saturday, January 28, 2012 at 11:55am.

Determining the future value of education. Jenny Franklin estimates that as a result of completing her master's degree, she will earn $7,000 a year more for the next 40 years. A.) what would be the total amount of these additional earnings? B.) what would be the future value of these additional earnings based on an annual interest rate of 6 percent?

personal finance - Henry, Sunday, January 29, 2012 at 4:28pm
A. 40yrs * 7000/yr = $280,000.

B. Pt = Po(1+r)^n.
r = APR = 6% = 0.06.
n = the # of compounding periods.

Pt = 7000(1.06)^40 = $720,000.26.

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